French watchdog calms UK asset manager fears over Brexit

LONDON (Reuters) - Cooperation agreements for supervising cross-border asset managers will be in place before Britain leaves the European Union next March, France’s top markets regulator said on Monday.

Asset managers are worried that if Britain crashes out of the EU next March with no transition deal, they would no longer be able to manage funds listed in the EU under a regime known as delegation.

London-based asset managers operate funds listed in Luxembourg and Dublin holding over a trillion euros of assets for customers across the bloc.

Robert Ophele, chairman of France’s markets watchdog AMF, said delegation could only be possible if memoranda of understanding (MOUs) have been signed between UK and EU regulators to cooperate in supervision.

“This type of MOU is very easy to write. We have them with many many countries and they all look the same,” Ophele told a conference in London organized by financial sector body AFME.

“It’s my absolute conviction that we will have that in force before the Brexit, whatever the Brexit will be,” Ophele said. “It’s not a big deal.”

Industry officials say regulators would likely announce the MOUs in November or later, once political talks on Britain’s EU divorce settlement, which includes a transition period, have been concluded.

France is seen by UK fund managers as trying to curb delegation in order to put pressure on them to shift senior managers in Britain to new EU hubs.

The EU’s European Securities and Markets Authority (ESMA) has issued guidelines on how far delegation can go, saying that the new EU hubs must have “substance” or sufficient number of senior investment staff.

Ophele said Paris-based ESMA’s powers should be bolstered to avoid national regulators across the EU diverging from centrally agreed financial rules for asset managers and other sectors.

National regulators should be forced to say publicly if they comply with all of ESMA’s financial sector guidance, he said.

Asked if ESMA should become a “super” regulator with much stronger powers like the U.S. Securities and Exchange Commission, Ophele replied, “In some cases yes, in other cases not. But it will not happen very rapidly.”